Analysts lift GDP estimate for 2009

The Phnom Penh Post
Thursday, 08 April 2010 15:01 Ellie Dye

THE World Bank has readjusted upwards estimates for Cambodia’s GDP performance in 2009 after unexpected signs of improvement emerged in the economy late last year.

Economists who drew up the biannual economic update on East Asia and the Pacific, released by the World Bank Wednesday, estimated that the Kingdom’s GDP contracted by 2 percent in 2009, 0.2 percent less than an estimate five months ago.

This contrasts with the government’s official assessment that GDP expanded 0.1 percent last year. The government has previously rejected estimates of recession in the Kingdom. Other international analysts including the International Monetary Fund and the Economist Intelligence Unit have estimated contractions in GDP last year.

The World Bank report released Wednesday forecast GDP growth of 4.4 percent in 2010, up from a 4.2 percent prediction in November. Garment exports – Cambodia’s main earner – are expected to expand 2 percent this year, after contracting 16 percent in 2009.

Huot Chea, the World Bank’s country economist, told the Post via email Wednesday the adjustments were made after aspects of the economy “improved unexpectedly in the last quarter of 2009”.

A doubling of agribusiness exports, a halt in the decline in tourists arriving by air, and signs that domestic credit and inflows of foreign domestic investment had “begun rebounding” were indicators of change, he said.

“The other crucial point was that garment exports were previously expected to drop by a 20 to 25 percent range, but ended up by declining less than 20 percent,” he wrote.

The World Bank report said Cambodia’s economy suffered “a serious setback” after the global economic downturn, but “signs emerged [in] late 2009 that the winds were shifting”.

The adjustments also reflect feelings among World Bank economists that the region has weathered the credit crunch.

“East Asia has recovered from the economic and financial crisis, largely thanks to China,” the report said, a viewpoint reiterated by leading economists Wednesday.

Speaking via video from Tokyo, the World Bank’s chief economist for East Asia and the Pacific, Vikram Nehru, congratulated ASEAN leaders in advance of the 16th annual summit, to begin in Hanoi today, on their handling of the economic crisis.

Nehru advised leaders to stay on top of regional development through better trade facilitation and managed migration and likened the economy to a bicycle.

“You have to continue reforming or else you fall off,” he said.

He also advised developing economies like Cambodia to look towards middle-term economic goals in the year ahead.

The report likens Cambodia’s situation to that of Vietnam a decade ago, when Vietnam chose to open its economy to foreign investment and began ambitious structural changes that boosted fixed investment to 32 percent of its GDP.

The World Bank estimates Cambodia’s foreign direct investment will grow to US$725 million in 2010, up from $515 million in 2009 and nearly rebounding to 2008 levels, when investments came in at $795 million.

The report’s principle author, Ivailo Izvorski, said through videolink Wednesday that developing nations should continue to make structural changes and increase capacity to make the most of prospective growth.

“Now developing countries have to get used to slower growth of their exports,” he said. “Before the economic crisis we were in a bubble.”
In its report, the World Bank also warned Cambodia of potential challenges in the year ahead.

Cambodia’s growth forecast could be put at risk by “the fragility of the global recovery, the uncertain capacity of the economy to diversify and the limited scope for a stronger recovery in credit”.

Huot Chea said after Wednesday’s conference that Cambodia could further protect itself from external shocks by diversifying its export markets, especially in garments, which are currently concentrated in the United States, which was hit especially hard by the economic crisis.

Cambodia managed to significantly raise exports to markets including Japan and Laos last year. However, trade rose from a small base in most cases.

Civil servant who handed out JCP paper cleared

Kyodo News
Tuesday, March 30, 2010

A former government agency employee was acquitted Monday of civil service law violations for passing out copies of the Japanese Communist Party newspaper in 2003.

Akio Horikoshi, 56, who worked at the Social Insurance Agency, received a rare suspended fine by the Tokyo District Court in 2006, but Monday's ruling by the Tokyo High Court reversed that decision, saying his actions did not undermine the administrative neutrality of a public servant.

"The defendant's actions were sporadic and unrelated to his work, and it is difficult to recognize that there were risks of hurting the neutrality of administrative management and public trust," said presiding Judge Takao Nakayama, adding it would be an "excessive restriction" of freedom to punish Horikoshi.

Nakayama also made a rare note that the freedom of public servants to engage in political activities has grown and "it is time to re-examine" what actions should be subject to punishment.

Horikoshi was arrested and indicted in March 2004 for distributing extra editions of the Akahata Shimbun in neighbors' mailboxes in October and November 2003, shortly before a Lower House election.

It was the first time a government official was accused of violating Article 102 of the civil service law since the Supreme Court found a postal worker guilty in 1974 of involvement in an election campaign for a Japan Socialist Party candidate.

Article 102 of the law bans civil servants from engaging in political activities.

Horikoshi argued in court that passing out the newspaper was a private action because it was done on a weekend and away from his workplace.

The district court sentenced Horikoshi in June 2006 to a ¥100,000 fine, suspended for two years, after ruling his actions violated the National Civil Service Law but did not immediately undermine the neutrality of a public servant.

"It is my greatest joy that the judge recognized my actions did not constitute a crime at all," Horikoshi said after the high court ruling.

Saying he was relieved to hear the decision, he added, "Although Japan has been left behind in the field of democracy, I think Japanese history changed" with the ruling.

The ruling was welcomed by Horikoshi's supporters and others related to the JCP.

"Looking at it from the standpoint of freedom of expression ensured under the Constitution, it is a righteous ruling," said Tadayoshi Ichida, secretary general of the JCP, adding the prosecutors should not appeal.

Horikoshi lost his public servant status after he was employed at the Japan Pension Service, which in January succeeded the Social Insurance Agency.

Cambodia temple ruins spur wider question: Are there time limits to the greatness of a nation?

Nature is winning its battle with Cambodia's Ta Prohm temple.


SIEM REAP, CAMBODIA — "Welcome to the Angelina Jolie temple," our guide said as we climbed stone steps toward Ta Prohm, one of the most beautifully eerie sites in Cambodia's ancient Angkor ruins.

I felt a stab of sadness. Not because the jungle was winning its battle with the 800-year-old temple. Yes, the massive roots of strangler-fig and silk-cotton trees were spectacularly crushing the temple's intricately carved corridors and pillars.

What saddened me was his eagerness to define this amazing icon of his once-great country by deferring to American pop culture. To be sure, he could have done worse than to associate Ta Prohm with the actress-humanitarian who visited here to shoot the 2001 adventure film "Lara Croft: Tomb Raider."

But this ancient wreck of a temple was the work of the mighty Khmer empire that once controlled vast reaches of Southeast Asia. It deserved respect in its own right.

Here and everywhere else in Cambodia, I couldn't stop thinking about how and why great civilizations have failed. The questions had puzzled me before I left Minnesota in February. And they've hounded me since my return.

Was Jared Diamond correct when he said in his book "Collapse" that societies fail because they inadvertently choose to do so?

Losing its mojo?

One reason the question nags is that so many Americans have lost confidence in their own prominence and prosperity. We're surrounded these days by headlines like the one in Newsweek a few months ago: "Is America losing its mojo?"

We still pile up the Nobel prizes (won mostly by American scientists in their 70s, Newsweek noted).

Look deeper, though, and it's clear that America "is like a star that still looks bright in the farthest reaches of the universe but has burned out at the core," Newsweek said.

One of many points it offered in support of that statement came from a study [PDF] last year by the Information Technology and Innovation Foundation in Washington. It analyzed 40 countries on various measures of what they were doing to make themselves more innovative in the future. The United States came in dead last.

Of course, doomsday predictions are nothing new in this country. Give me any national crisis, and I think I could find a related political cartoon featuring a variation on the theme "The end is near."

But polls find an epidemic of pessimism in the country today. "The 'American Century' was sooo last century, as many Americans see it," ABC news said about a poll it conducted with the Washington Post last month. About half of those polled expect the United States to play a diminished role in world affairs and the global economy.

Those findings are consistent with other recent polls in which as many as two-thirds of Americans have said they do not believe our future will be as good as our past.

Lifespan of a great state

At Ta Prohm, I was torn. Much as I hated to see the destruction, I couldn't help admire those tenacious trees that were snaking their roots around the hand-carved walls and columns of the Buddhist temple.

Maybe there are natural limits to the greatness of a state — sort of like the limits on a human lifespan. Live right, and you can live a bit longer. But just as death is inevitable, so has been the history of great nations eventually slipping from the pinnacle of power.

There are different ways to fall from power, though. As Diamond put it in his best-selling book, a few empires have collapsed catastrophically, and the monumental ruins they left behind "hold a romantic fascination for all of us."

In the evening vendors sell food for riverside picnics in Phnom Penh.


Others have managed to decline with minimal damage, even with grace. Former British Prime Minister Harold Macmillan famously marked the end of his country's dominance over Africa with his eloquent "Wind of Change" speech before the South African parliament in 1960.

"The wind of change is blowing through this continent, and whether we like it or not, this growth of national consciousness is a political fact. We must all accept it as a fact, and our national policies must take account of it," he said.

Britain may have fallen from world dominance, but life in what's left of the U.K squares with my standards for quality.

Cambodia, though, kept falling, falling, falling — right through the 20th century. And it fell so hard, so far.

Some historians blame an excess of self-indulgence. (Ring any alarms for modern-day America?) This temple and its magnificent neighbors — especially the granddaddy of them all, Angkor Wat — demanded an unbelievable investment of labor and resources. Impressive as they are as public works, some of that human power could have gone into farming and defending the land.

The ravages of war

Another cause was the ravages of war. After repeated battles with the Siamese, the Cham (now a fallen people in their own right) and the Vietnamese, almost all of the great temple communities in this part of Cambodia were abandoned by the 15th century.

By the 19th century, the country was on the verge of dissolution, and it fell under French control.

The 20th century brought independence, but neither peace nor prosperity. In the 1960s, supposedly neutral Cambodia allowed the North Vietnamese to use parts of the country for the resupply and training it needed to support its operations in the war next door. And the United States bombed Cambodia, killing thousands of people.

Finally, the unstable country fell under the control of the brutal Khmer Rouge regime headed by Pol Pot. One in every five Cambodians — some 1.7 million people — died during the 1970s. The educated were murdered, the cities were emptied and the people were forced into a living a tragic delusion of idealized peasantry. Starvation and disease reigned.

Cambodia has made remarkable strides toward recovery in the past decade.

It takes time, though, and immense effort to rebuild a shattered society. Someone born in Cambodia can expect to live about 60 years, compared with nearly 80 years in the United States. One in four Cambodians is illiterate. And a baby born here is nearly as likely to die before its first birthday as one born in Haiti.

The sun setting on Cambodia's Tonle Sap lake.



You still see too many gaunt people sleeping on sidewalks in Phnom Penh, the capital. Too many toddlers are begging — some under the direction of adults who drape the tots in snakes to attract the attention and dollars of tourists. Too many treasures in this temple and others nearby have been plundered for sums that couldn't be anything but paltry considering their priceless historic and architectural value.

Such is the state of a country which once was so advanced that the French naturalist Henry Mouhot declared [PDF] its buildings to be "grander than anything left to us by Greece or Rome."

I still was haunted when I got home from Cambodia by the contrast between the great Khmer empire and the sorry state of the country today.

Thinking about the broader implications, I pulled from my shelf a slender book by David Boren. A Democrat, he was a U.S. senator, governor of Oklahoma and president of the University of Oklahoma.

"The country we love is in trouble," Boren begins his 2008 book, "A Letter to America."

"In truth, we are in grave danger of declining as a nation," he said.

Boren doesn't pull his punches. Among other points, he said:

• Our political system is broken. Bipartisanship, with the parties working together to solve urgent problems, is viewed with nostalgic romanticism.

• Grassroots democracy is being destroyed by a flood of special interest money being poured into politics.

• Shockingly, we as citizens are becoming incapable of protecting our rights and democratic institutions, because we do not even know our own history.

• The greatest risk to our economy is posed by continued budget deficits.

• The middle class in our country is shrinking, with many falling into the category of poor or nearly poor. ... Continuing to pursue an economic policy driven by greed will destroy us socially.

Scary stuff.

Did any wise man ever give such pointed warnings to the people of ancient Angkor? Did they, maybe, ignore the wisdom to their great peril? Did they laugh when some bearded sage said, "The end is near?"

A strategy for the future

Still, Boren reassured me somehow — partly because he offers a bold strategy for pulling the nation back on a sound footing. Here's a sampling of his suggestions:

• Amend the Constitution to restrict campaign contributions to those who are eligible to vote in a given candidate's election. Congress never will do it. Either will the courts (And Boren wrote this before the U.S. Supreme Court recently cut restraints from corporate contributions.)

• Get a grip on entitlement spending by raising the retirement age for full Social Security benefits and also raising the taxes well-off recipients pay on their benefits. Use means testing to end Medicare for millionaires and raise premiums for other high-income earners so that they aren't subsidized by struggling young workers.

• Launch a nationwide American history crusade and require all college and university students to study government and our nation's history before they graduate.

Because of tough-minded Americans like Boren — people with the guts to say everyone has to contribute and sacrifice for our collective future — you won't see me wearing an "End is near" T-shirt anytime soon.

Maybe giant trees will take back Capitol Hill one day. But I don't believe we are even close to being finished at this point.